Customer Lifetime Value The Path to Profitability

This survey talks about Customer Lifetime Value (CLV) as a metric that would help managers make informed business decisions. While there have been prior articles that take an extensive and in-depth look at Customer Equity (CE)(Villanueva and Hanssens, 2007), this survey reviews the CLV metric in particular. The definition and approaches to compute CLV and the concept of customer equity are discussed in detail. Specifically, this survey provides methods for measuring CLV, the strategies for developing customer-centric strategies, the implementation of CLV strategies in a B2B and B2C setting, and the challenges faced by an organization in implementing a CLV-based framework. This survey details the importance of CLV as a metric in a marketer’s toolkit and how it is relevant to managing customers. ∗V. Kumar (VK) is the inaugural holder of the Richard and Susan Lenny Distinguished Chair in Marketing, and the Executive Director of the Center for Excellence in Brand and Customer Management. The author thanks Bharath Rajan and Saurabh Bhargava for assistance in the preparation of this manuscript, and Joseph Pancras and J. Andrew Petersen for their valuable feedback. The author owes additional thanks to Renu for copyediting this manuscript. Full text available at: http://dx.doi.org/10.1561/1700000004

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